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Dollar sold off across the board on gain in risk appetite as equities rally

Sterling closed out last week mixed as we saw continued strength in cable but a fall against the euro. The pound fell versus the single currency which was the first decline in 3 days for GBP/EUR on speculation improv¬ing confidence and house prices aren’t enough to shore up the recovery and convince the Bank of England to raise borrowing costs. Sterling declined against most of its 16 major peers. An index of sentiment rose 10 points to minus 21 in May from the previous month, the highest in five months, according to Gfk NOP ltd. Despite this, the UK picture remains very bearish, interest rate expectations have come off massively which will keep the pound under pressure. Sterling's decline against the euro was steep as we saw a fall from 1.1611 to 1.1469. Cable’s move was helped by the steep sell off for the dollar as we saw GBP/USD hit $1.6528.
No major data.    

The euro rose to a three week high against the dollar and took 0.40% off sterling on speculation European offi¬cials will approve additional assistance for Greece as part of efforts to counter the regions debt crises. The euro pared its first monthly loss since November after Luxembourg Prime Minister Jean-Claude Junker said Euro¬pean leaders will decide on a new aid package by the end of next month. The euro is doing well, all things con¬sidered, as there's a degree of confidence that cooler heads will prevail and the next round of assistance will be forthcoming for Greece. The single currency advanced to $1.4375 on the dollar and 0.87 versus the pound. Also helping the euro came news that Germany may stop demanding an early rescheduling of bonds for Greece so that it can get a new packaged of loans.
Data 10.00: Unemployment Rate 9.9% unchanged.

We saw the dollar sold off across the board last week as risk appetite took a firm grip on the markets and the safe haven currencies were pushed to one side in favour of more so called ‘riskier. currencies. In Asian trade, we saw this continue as equities rallied and the Nikkei posted close to a 2% rise. European markets have opened up strongly on the back of this, helped by better noise coming out of Europe with regards to the Greek issue. The greenback has already lost another cent on the dollar as EUR/USD broke through the $1.44 handle and a similar pattern was seen in the value of cable. The dollar gave up just over half a cent as GBP/USD broke the $1.65 handle.  
Data 15.00: CB Consumer Confidence expected 66.3 from 65.4.
• The New Zealand dollar climbed to a record on speculation the central bank will raise interest rates after a report showed business confidence increased to a 12-month high in May.
• The yen fell versus all its major counterparts after Moody’s Investors Service placed Japan’s credit rat¬ings on review for possible downgrade.



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GBP/USD 1.6510
GBP/EUR 1.1460
EUR/USD 1.4410
GBP/JPY 134.90


GBP/NZD 2.0009
GBP/ZAR 11.3751


GBP/CAD 1.6010
GBP/SGD 2.0316



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These rates are for indication purposes only.

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John Paul Georgiou

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+44 (0) 20 7959 6917


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